The Factors of Production

Welcome: Factors of Production Section

Description: At the end of this Webquest students should be able to identify the four factors of production

Grade level: 7

Curriculum: Business Basics

Keywords: Production, Land, Labour, Capital, Entrepreneur

Author (s): Shaneillia Dunkley

Arent you curious to learn about the different factors of production? At this section you will find all that you need to know and more about the factors of production.

Here we go!!!!!!!

Production

What is production?

The process of creating goods or services that are needed and used by customers.

Production is said to take place when input changes to output.

Primary human needs are food, shelter, clothing, etc. along with secondary (social) needs and tertiary needs (achievement or self-esteem).

What are factors of Production?

The factors of production are resources required for the manufacturing for the different types of goods or services in the attempt to make an economic profit. They are said to be rewarded for the contribution that they make towards production.

The four factors of Production:

1. Land
2. Labour
3. Capital
4. Entrepreneurship

Land

This factor of production refers to the land itself and its natural resources that it offers, including the sea. It can therefore be referred to a free gift of nature and is considered the most important factor of production. Hence, without land production would not be able to occur. One should bear in mind that these natural resources come from above and below the earth. Land can further be subdivided into renewable and non-renewable resources.

What are renewable resources?

Renewable resources are the resources that can be replaced as quickly as it is used. Continually replaced.

Examples are: trees, fishing, agriculture, forestry and so on.

What are non- renewable resources?

Non-renewable resources are resources that cannot be replaced after they have been used. Cannot be replaced after being consumed (may also take years to be replaced).

Examples are: bauxite, oil, coal and so on.

Labour

This factor of production refers to human inputs of work to produce the goods and services. The power to work; human effort of any kind that can either be manual (working with the hands such as carrying, cutting) or mental (using the brain such as trading, accounting). It involves the physical and mental efforts of individuals as the convert natural resources in finished goods and services. Labour can be classified as: unskilled, semi-skilled, skilled and professional.

What is unskilled labour?

There is no special ability required to perform tasks, examples, men who carry blocks and buckets of cement on a construction site.

Examples are: dishwashers, garbage collectors, shop keepers and so on.

What is semi-skilled labour?

The ability and skills to do a particular task is only partially developed. Examples are: nurse’s aide, waiter/waitress and so on.

What is skilled labour?

There is a special ability to do a particular job. These skills are developed through specialized training.

Examples are carpenter plumber, electronics and so on.

What is professional labour?

Those individuals with the highest level of knowledge based education and managerial skills with a bachelor’s degree or diploma.

Examples: teachers, bank managers and so on.

What is Capital?

This refers to resources such as money and other assets that are necessary in the process of production. Capital includes: buildings, machinery, stock, money and so on. Things that are needed in the day-day operations of the business. Capital can be divided into physical capital and social capital.

What is physical capital?

Physical capital consists of:

1. Fixed Capital
2. Working Capital
3. Financial Capital

Fixed Capital: this refers to capital that is long lasting and does not change in the course of production. They are repeatedly used in the operation process and the creation of wealth Examples: buildings, machinery, tractors etc

Working Capital:this refers to capital that changes in the course of production. Things that are needed the day-to-day running of the business that are constantly used up in the process. Examples: raw materials, cash etc

Financial Capital: This refers to money capital which the company uses to run its day-to-day operations. It consists of loan capital and share capital.

Social Capital

Other than private investments, there are public investments that take the form of government expenditure on factories, plant, machinery or on road airports, utility and etc.

Entrepreneurship

Entrepreneurship is said to be the fourth factor of production. This refers to a person who coordinates all the factors of production (land, labour and capital) in order to produce goods and services. We can all agree that the other three factors are important in the process of production, but without and entrepreneur to organize these factors production could can have been achieve or achieved more efficiently. Entrepreneurs are said to be the owner of a business and it is their role to take on risks of the business. Also to make decisions that will ensure that the business makes a profit.

Functions that an entrepreneur must be willing to carry out:

1. To raise capital
2. To ensure that all the factors of production are being used correctly
3. To identify and clarify decisions related to business
4. To take risks by entering the market place.
5. To make any changes that are necessary towards the growing of the business
6. To organize the different types of labour required.

Please see video for further information on factors of production.

https://www.youtube.com/watch?v=V_InI4S3fZ4

Hey, now that you have gotten information about the four factors of production, you can now go ahead and attempt to answer these questions

Activity

Please complete the following questions.

1. Name the four factors of production
2. Distinguish renewable and non-renewable resources
3. Differentiate between professional, skilled, semi-skilled and unskilled labour.
4. Explain two functions that an entrepreneur must be willing to carry out.

• After a short a short preview of a digital animation, students will be asked to identify at least three of the four factors of production.

• After given a case study on the PowerPoint presentation, students will evaluate the manual labor of workers.

• After viewing two charts depicting manual labour, students will be asked to select atleast four appropriate technologies that can be used to enhance the work being done.

• Students will design a scenario using the four factors of production.

The factors of production are of paramount importance as without them products and services would not be made available for consumers.

The author wishes to thank God for allowing her to have an idea as to what is to be done. Additionally, she wishes to thank her lecturer Mr. Blair for his guidance throughout the process as well as other individuals who encouraged her along the way.

Webquest enhances the lesson, it increases students participation and motivation. We all know that when students are motivated they are likely to put more effort in the lesson, and their minds are more alert and ready to make connections hence this is an excellent medium to do so.